China's stock market crash is the real game in town

China's market regulator has introduced a string of new rules in the past week to try to relieve pressure on Chinese shares. The Shanghai Composite has fallen by more than 30% since mid-June.

On Wednesday, the Shanghai Composite fell as much as 8.2%, leading some analysts to describe the session as 'Black Wednesday'.

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That hasn't stopped state-run media, who helped spark the bull market by advocating equity investment toward the end of last year, from assigning blame. Financial News, backed by Chinese authorities including the central bank, ran an opinion piece on Friday that asked if Morgan Stanley had a "hidden agenda" connected with the stock market.  Article

Really I just want to say that Kiwis should be very concerned by economics developments in China. The emerging Chinese middle class will feel the squeeze from there own share market bubble bursting. So events in China are posed to gave a much larger economic impact on New Zealand then events in Greece. Greece's melt down can only drag down German and French banks down with the EU Titanic.

At most the EU entering a slow terminal illness will sends ripples across the oceans to New Zealand's economic outlook. If the Chinese middle class stop buying Kiwi dairy products a economic Tsunami could be heading our way. Falling commodity prices and lower demand could see the New Zealand government's books go from running modest surpluses back to hefty deficits.

If New Zealand government doesn't run a surplus and paying back debt , what might be install for the future? In the long term New Zealand would risk becoming the Greece of the South Pacific. China's economic slow down is going to be around for the next five years. These years will be make or break for New Zealand in economic terms.

I would urge the reader to take note of how the Chinese government is placing the blame for the stock market on foreign investors. Blaming foreigners is the oldest trick in the book. By blaming foreigners the Chinese regime doesn't have to admit that it failed to educate people on the workings of the stock market.

Ironically I believe that a historical parallel exists between Japan in the 1930's and China's emergence as a military and economic power. China like pre war Japan has territorial ambitions. Support for these territorial claims relies on the hatred of foreign influences. Such hatred will also fueled by the Chinese population misplacing the blame for their economic hiccups.